The ratings contained in this report and the
report itself were produced outside the European Union and therefore are not
issued by The Economist Intelligence Unit credit rating agency, which is
registered in accordance with Regulation (EC) No 1060/2009 of 16 September 2009,
on credit rating agencies, as amended. This report and the ratings, therefore,
are not issued pursuant to such Regulation and do not fall within its
scope.

Uzbekistan’s sovereign risk rating remains unchanged, at B, although the score has worsened from 49 to 53. The Economist Intelligence Unit believes that the current-account will move into a deficit of 5.5% of GDP in 2018, significantly weighing on the sovereign risk score. Corruption levels are high, and significant directed lending continues to weigh negatively on the rating. The rating outlook is stable.

Currency risk

The currency risk rating remains unchanged at BB. The underlying score has worsened from 46 to 50 owing to increased volatility in the som as well as a slight fall in international reserves, which nevertheless remain significant (equivalent to 17.5 months of imports) in 2018. The rating outlook is stable.

Banking sector risk

The banking sector risk rating remains unchanged at CCC, and the score has improved by 1 point, from 61 to 60. Official soundness indicators for the sector are reassuring, but we are sceptical about data accuracy. Domestic funding accounts for the bulk of the loan stock, and the impact of the September 2017 currency depreciation on the banking sector was limited.

Political risk

The political risk rating remains at C, reflecting the authoritarian nature of the regime. Shavkat Mirziyoyev was confirmed as president following a heavily managed election in December 2016. He has made personnel changes to consolidate his authority and has started to introduce economic reforms.

Economic structure risk

Economic structure risk remains B-rated. Low levels of integration into the world economy limit the country’s foreign liabilities. However, Uzbekistan is highly dependent on commodity exports, especially gas, as well as gold, cotton and copper. The economy is uncompetitive and state intervention is high.